In response to the President’s concerns about Indonesia’s business climate, the Energy and Mineral Resources Ministry has relaxed requirements for firms to seek ministerial approval when changing their top management or when transferring shares or project interests.
President Joko “Jokowi” Widodo recently criticized a number of ministerial decrees, including of the Energy and Mineral Resources Ministry, which he considers burdensome for businesses and detrimental to his attempts to increase the country’s appeal for investors.
The new decree, Ministerial Decree No. 48/2017, replaces just two-week-old Decree No. 42, which obliged firms in the energy and mining industry to secure approval from the minister for high-level management shake-ups as well as a partial or full transfer of shares or participating interests in a project.
Signed by Energy and Mineral Resources Minister Ignasius Jonan on Thursday, the new rules only demand firms in the upstream oil and gas sector to obtain the minister’s agreement for transfers of participating interests or shares that change controlling share ownership.
“The new decree aims to realize values of good governance and increase the surveillance of companies in order to garner the maximum benefit for the people, while also maintaining a good investment climate,” Ghufron Asrofi, who leads the legal department at the ministry’s oil and gas directorate general, said on Monday.
According to the new rules, ministerial consent is also necessary for mining firms for both a transfer of shares or change in top management. A similar approval also applies for firms in the geothermal sector that list their shares at the local bourse.
The new decree may alleviate anxiety among investors, who had complained about the issuance of numerous controversial decrees by the ministry since early this year.
Among them are Decree No. 8/2017 on a gross-split scheme for new upstream oil and gas contracts and Decree No. 12/2017 on prices of electricity generated from renewable energy.
Top officials of the ministry, particularly Deputy Minister Arcandra Tahar, promised to revise the decrees and have them signed as soon as the President took issue with them, but no revision had been revealed until Monday.
Burdensome decrees may hinder the government’s objective to jack up the investment in the energy and mining sector to US$43 billion this year from $27 billion last year.
Business players in the extractive industries applauded the ministry’s move, calling it a step toward improving policies for investors.
Indonesian Petroleum Association (IPA) executive director Marjolijn Wajong said the new decree incorporated many of the group’s suggestions.
“This is a good move by the ministry. It has listened well to what we requested [for the revision],” said Marjolijn during the announcement of the new decree. “Had the decree not been revised, it would have been really tough for us to implement it in our business.”
Indonesian Renewable Energy Society (METI) chairman Suryadharma also welcomed the revision, pointing out the improbability of implementing the previous one.
“All the things the ministry requires in the previous decree are what investors have always done themselves in general shareholders’ meetings. It is simply impossible to comply with both the government and the stakeholders of a company, as their decisions cannot be synchronized,” Surya told The Jakarta Post. “This revision is a positive sign that the government has accommodated the needs of stakeholders in the renewable energy business.”
Source: ‘Govt Losens Reins on Oil, Mining Firms / The Jakarta Post
8 August 2017